As part of international efforts to reduce greenhouse gas emissions, the government is considering whether to introduce higher mandatory targets for renewable energy sources, such as wind and solar power, for the country’s utilities in fiscal 2011-14.

The obligatory use of new sources of energy is in line with the renewable portfolio standard (RPS) program outlined in the Special Measures Law Concerning the Use of New Energy by Electric Utilities–known as the RPS Law–which came into effect in fiscal 2003.

The law obliges utilities to rely on five kinds of renewable energy–wind, low-head microhydraulic, biomass, solar and geothermal power–for more than 1.35 percent of their electricity by fiscal 2010, or 12.2 billion kilowatt-hours of what they sell nationwide.

But, given the technical challenges to achieving the target quickly, power companies have been given a transitional allowance to gradually meet the target by fiscal 2010, beginning from 0.39 percent in fiscal 2003.

The mandatory level for fiscal 2006 is 0.52 percent.

Every four years, the Economy, Trade and Industry Ministry sets a new utilization target for renewable energy to be achieved within eight years. In accordance with the long-term target, annual mandatory goals are set for the power industry, and the ministry hopes to complete drawing up new goals by February 2007 to meet the 2014 target.

If utilities fail to meet the mandatory usage target, they will be subject to a fine of up to 1 million yen.

The ministry hopes the nation can achieve Japan’s pledges under the 1997 Kyoto Protocol on climate change for reducing greenhouse gases through the increased use of new energy sources.

However, the electricity industry is growing increasingly dissatisfied with METI’s approach, because new energy generation is comparatively costly, and likely will impose higher cost burdens on their operations, which could lead to price rises.

The RPS Law has accelerated utilization of new energy sources, particularly wind power. In fiscal 1999, the nation’s overall wind generation capacity stood at 80,000 kilowatts from 198 wind turbines, but by fiscal 2005 the number of wind turbines had increased to 1,050, raising potential output about 13 fold to 1.07 million kilowatts.

Some wind farms are also becoming larger. For example, Electric Power Development Co. (J-Power) plans to start operating 33 wind turbines, capable of generating as much as 66,000 kilowatts, at the Nunobiki-kogen heights in Koriyama, Fukushima Prefecture, in February.

This should generate enough capacity to supply about 35,000 households a year.

The ministry is considering increasing the mandatory proportion of utilities’ overall electricity sales that must come from new energy sources to between 1.5 percent and 2 percent in the fiscal 2011-2014 period.

The power industry has reacted angrily to the METI plan, with utilities arguing that renewable energy generation is so costly compared with nuclear and thermal power that their operations will be adversely affected.

The cost of wind generation is 10 yen to 14 yen per kilowatt-hour and that of photovoltaic (solar) power generation 45 yen–considerably more than the 6.2 yen for liquefied natural gas and 5.3 yen for nuclear power, according to the Federation of Electric Power Companies of Japan (FEPC).

Utilities also are skeptical about renewable energy sources because they do not offer a stable supply of electricity. Wind power generation output, for example, can fluctuate dramatically, depending on the strength and direction of the wind, necessitating standby supply systems such as thermal power plants in the event of a sudden drop in wind power output. Solar power generation is by its very nature reduced on a cloudy day.

According to the FEPC, the electric power industry will have to spend an estimated 93 billion yen to comply with its 2010 obligations.

Power company executives say it makes no sense for the government to oblige utilities to meet the mandatory targets while at the same time expecting them to lower electricity prices through the deregulation of the electricity power market.

Tsunehisa Katsumata, FEPC chairman and president of Tokyo Electric Power Co., said: “I’m opposed to an increase in mandatory levels for new energy sources. The issue of cost-efficiency should be discussed.”

The proliferation of wind power facilities, meanwhile, has also met opposition from some environmentalists and residents on ecological grounds such as bird strikes, in which birds get caught in wind turbines, or because they consider them an eyesore.

METI, for its part, has shown no sign of compromise in its quest to accelerate the adoption of renewable energy. It maintains Japan must make greater use of new energy sources not only for the sake of developing cutting-edge energy-saving technology, but also for energy security purposes, so that Japan is less dependent on imports.

METI has requested an allocation of 151.9 billion yen in the fiscal 2007 budget–almost unchanged from fiscal 2006–for new energy-related projects.

The budget request combines a related proposal from the Environment Ministry.

Tetsuji Tomita, senior coordinator of the Japan Institute of Energy Economics, said an increase in the use of new energy sources such as wind power likely will push up the cost of electricity.

Considering the importance of the use of new energy sources, and taking into the costs, he said consumers should also be involved in the debate over the targets.

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